Not-so-dumb money, surprise sector blowouts, more Japan bull

By Barbara Kollmeyer

Reuters

What’s to say on the last trading day of the year that hasn’t already been said before? Not much, so we’ll keep it brief and let you get onto swilling Champagne.

It turns out the winning strategy for 2013 had nothing to do with rocket science or market-timing strategies. Nope, following the “dumb money” (even as it explodes) was the best way to play this market, write WSJ’s Tomi Kilgore and Tom Lauricella. Hedge funds were left to eat the dust of investors who bought and held plain-vanilla portfolios of U.S. stocks, and old-fashioned and low-fee U.S. stock funds.

“If you could have just invested in one of the major indexes and worked on your golf game the rest of the year, you would’ve hit a home run,” David Rolfe, chief investment officer of St. Louis’s Wedgewood Partners, told the WSJ.

Our own RetireMentor George Sesti agrees wholeheartedly with the “dumb money” theory, saying investors need nothing more than a prudent long-term investment strategy: “Your portfolio is Superman. Market timing is kryptonite,” he says.

And if you’re thinking of thumbing through 2013’s worst-performing sectors for ideas for next year, here is the bounty to choose from: Anything to do with gold and silver, oil and gas, cigarettes, beverages, brewers, sporting activities, and farm and construction machinery, among others.

Otherwise, relax and enjoy the next 48 hours before it all starts up again.

The economy:The last data points of the year will be Case-Shiller home prices at 9 a.m. Eastern Time, Chicago PMI at 9:45 a.m. and consumer confidence at 10 a.m. The 20-city Case-Shiller index rose 0.2% in October over September and was up 13.6% from a year ago. The year-on-year increase was the fastest since February 2006.

Call of the day: Bulls are running wild where Japan is concerned. Gartman Letter’s Dennis Gartman says that eye-popping 57% gain for Japanese stocks
/quotes/zigman/5986735/realtimeJP:NIK in 2013 is not the end of the story. He tells CNBC that a weak Japanese yen — driven by Abenomics — is going to have a “very, very strong impact upon Japanese equities,” turning it into one large short-the-yen trade.

“So, I want to be long of the Nikkei. I want to be short of the S&P, one against the other. At the same time, I want to be short of the Japanese yen against the English-speaking currencies,” he says, adding that he wants to own gold in yen terms.

Of course, he’s not the first to go wild over Japan stocks. Among others, Credit Suisse’s Andrew Garthwaite said late November that investors should overweight the country in 2014, arguing that Japanese firms have the most to gain from a pickup in global growth because they were particularly vulnerable to the downturn.

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